M&G Investments has bought a London site to develop a £203m (€233m) hotel complex.

The manager said its £4.1bn M&G Secured Property Income Fund will fund the development of the 620-room hotel and aparthotel scheme in Paddington. The development will be carried out by development consortium known as Concierge 3.

The M&G fund, which invests in UK real estate assets let on long-term leases, said the tenants of the scheme will be Premier Inn and Staycity Group and it is expected to open by 2021.

Kevin Vickers, an investment director at M&G Real Estate, said: “Business travellers continue to seek well-connected and affordable central London accommodation.

“The £2bn invested in Paddington in recent years has predominantly been invested in office and residential developments, positioning this hotel and aparthotel transaction as an attractive investment opportunity.”

Ben Jones, the manager of the M&G Secured Property Income Fund, said: “This is a rare opportunity to acquire a large scale, high quality property in central London offering such long-term income.

“Our institutional investors continue to seek assets with long leases that generate income in order to meet regular pension fund payments, as well as the potential increase in commercial property values when investing over the long-term.”